Job Security in Medicine is a Myth

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Imagine, if you will, that you’re an anesthesiologist. You’ve been part of a successful practice for over 10 years. You can walk down your neighborhood street and run into mothers whose epidurals you’ve helped place. You’ve established a home, a community, and your children are in a great school system.

One uneventful day, say Wednesday, you get an email from the hospital administrators announcing that there’s going to be a meeting on Friday. You’re not sure what it could be about, but you don’t give it much thought.

When Friday rolls around, you discover that the meeting was held to inform you that the contract for your group has not been renewed and a new national practice management company will be taking over all anesthesia services shortly. Details are pending, but from what you’ve heard, you will have the option to stay on board and accept 30% less than what you’re making now or move on.

Sound impossible? Unfortunately, based on several accounts from close friends and colleagues in just the past few years, this situation is more common than you’d think.

Things Have Definitely Changed

We pursued this career in medicine because we were passionate about medicine, about helping people, and making a difference. One of the nice benefits along the way is that it seemed to promise a pretty good, stable financial life with job security. How many of us saw ourselves as the gray-haired physician, wise in all of his or her knowledge, smiling over our patients?

However early in my career, I began to realize that all doctors don’t necessarily live the lifestyles you see in TV shows or movies with country club memberships and fancy cars. And I was fine with that. At least I’d have a stable income and be able to provide for my family while enjoying what I’m doing, right? At least I’d be better off than some of my other college friends who went into finance, only to lose those jobs when the economy crashed. I had a set path, and as long as I kept on it, then life stability was in my future.

Well, I’ve found out that this isn’t necessarily true.

There may be a demand for physicians, but it doesn’t mean your job is secure. As we hear of other industries in upheaval, some entire industries collapsing, and huge industrial stalwarts having financial issues (GE was just taken off the Dow by the way), and with job security at an all-time low in many ways . . . are we immune to it all?

I work in an academic setting where I get to talk to graduating residents and fellows about their future plans. Increasingly, people are flocking to jobs that provide stability and security, like some large unnamed healthcare institution prominent in my area that is known for pensions, educational half-days, and a great healthcare plan. Apparently, very few doctors wanted to work there in the past, but with everything that’s going on in healthcare, it’s become an extremely coveted health system to work for–and much of it has to do with job security and benefits.

Why Job Security in Medicine is a Myth

In some ways it saddens me to say it, but I think that in modern times, job security as physicians is an illusion, a myth. Here’s why…

You Can Be (And Are Being) Replaced by Non-Physicians

I’ll be honest, there’s a certain amount of pride that I carry being a physician. It wasn’t easy getting here, and surely having that degree and training as well as years of experience must make it tough to be replaced. Plus, you constantly hear about a physician shortage nationwide. The basic laws of macroeconomics indicate that a reduced supply should mean increased demand, and as a result, prices and wages should increase, right?

Wrong. Unfortunately, in healthcare, the macro solution to that physician shortage has been to find other people and ways to fill that gap: train midlevel providers and empower them with the same abilities as physicians and create parity by treating patients through algorithms. The physician is merely reduced to a “provider” and a technician, and one that can be replaced by either another physician at a cheaper rate or another type of provider.

Regardless of how you feel about this or whether you believe it’s right or wrong, it is happening. Just as in my opening example, anesthesia groups and hospitals are asking, “Why employ a group of all physicians when you can employ ‘physician extenders’ or a mix at a much lower cost?”

You Can Be (And Are Being) Replaced by Other Physicians

Physicians used to be their own brand to a certain degree. Being in private practice meant that patients were coming to YOU because of your reputation and skill level. Look around, private practice today is being squeezed out of existence.

Healthcare systems spend millions of dollars building up their own brands so that patients now think of receiving care from a particular health system vs. a particular physician. Ask a friend now who they go see for their healthcare. Most will tout what health system they belong to. Increasingly patients are of the mindset that they don’t really care who they go to, as long as it’s within a health system with a good reputation, it’s covered by their insurance, and it’s convenient to get an appointment.

As a result, any leverage that physicians once had as a unique and powerful brand is fading. Not happy with the deal you’ve got with your hospital? Well, that’s okay, we’ll replace you with another physician willing to accept our terms and it’s “plug and play.”

Unfortunately, newer physicians will happily take the terms to have a job. I see it happening all over the place. Like the opening story, if you’re not willing to take a 30% haircut on your salary, move on, we’ll surely find someone else to fill the void and things move on like usual. You will be replaced by a younger, hungrier physician.

Physicians are not organized in the form of unions and unfortunately the large medical organizations we pay large dues to each year haven’t been able to create the sort of leverage and bargaining power to prevent these things from happening.

Automation and Technology

Seemingly every field is falling victim to automation and technology. Are physicians immune to this?

I just read about how automation is killing certain jobs and industries. It’s easier for us to imagine a machine flipping burgers, but how could it replace a physician, right? While the Sedasys machine suffered a very public defeat, the fact that it was even developed and no doubt still on the horizon does not bode well for anesthesiologists.

Other fields in medicine besides anesthesiology could one day fall victim to this as well. Radiology, Surgery, and other fields associated with a high cost (physician salaries) are being targeted as we speak.

But what about empathy, human touch, and human decision-making? Unfortunately, those things are not enough to keep “progress” from happening. Autonomous human decision-making by a physician is actually becoming increasingly highly discouraged. Follow the health system protocol, otherwise, face disciplinary action and in some cases financial penalties.

Lawsuits

This one speaks mostly for itself. In the litigious environment in which we work, there’s always a risk that a poor outcome could end your career and financial wellbeing.

That’s what malpractice insurance is for right? Well, only to a certain degree. Sure, lawsuits are mostly settled under the limits of what insurers are willing to pay out. In addition, creating a separate legal entity for your medical practices should shield litigators from going after your personal assets. So you should be able to sleep safe and sound, however, dig a little and you will hear stories that will tell you otherwise.

Besides pure financial damages, if a lawsuit is high-profile enough, think about how that will help or hurt your career regardless of the outcome of the case. Imagine that you’ve built up a reputation that you’ve worked hard for over the years, and then you get sued in a very public way. A good or poor reputation can make or break a career like ours.

The Medical Board, Licensing, and Credentialing

We tend to take our licenses to practice medicine for granted. I think most of us received our first license after our internships. In my residency, it was a requirement to advance. It’s something we’re entitled to after all those years of schooling and training.

The fact is, with every case you take, your medical license is potentially on the line and therefore your career and financial pipeline. I didn’t ever think about this until a friend’s license was put at risk for a poor outcome. He did everything he could to help his patient get through a very stressful situation, yet he was still put through the wringer. He had to spend an extraordinary amount of money to hire his own lawyers for not only the lawsuit itself, but also to go before the medical board to fight for the right to keep his medical license.

Some might say, well that’s what should happen for someone practicing outside the standard of care. I understand that aspect, that there needs to be accountability. However, I know personally that he performed admirably in an extremely difficult situation yet still suffered for years dealing with the aftermath. How do I know this? Well, I was there in the room when it happened, providing care as well. I was then asked to be a witness in front of the medical board where his career was in the hands of a judge. I saw a small part of the process, and it was not pretty.

Thankfully the judge ruled in his favor, but what if she didn’t? What would’ve happened to his career? Would he be able to reinstate his license at a later date? Would he ever be able to be credentialed at another hospital? Who knows.

Hospital Administration

Think you can’t be replaced as head of a department or as a key faculty member, even at an academic institution? Well, if you’re not performing or producing like they would like, they can find someone else. I’ve seen it happen.

It seems as if the relationship between hospital administrators and doctors is increasingly getting more impersonal, and as larger corporations take over health systems and consolidate, the decisions are being made at a distance, making it easier to change how things operate. Not meeting defined objectives and revenue targets, sorry, your contract may not be renewed and you may be replaced with someone more aggressive who might meet those RVU or research goals. I’ve seen this happen firsthand with family members who were physicians.

The Economy

I was fortunate to still be in training during the Great Recession of 2008. But I heard the stories of physicians not being able to find work. Elective surgeries were down, and so physicians who particularly relied on those, like plastic surgeons, cosmetic derms, and the anesthesiologists who helped them were struggling.

It’s even been said that our profession is recession-proof, yet as I started working in 2011, the effects were still being felt and caseloads still were down. Finding cases to staff in the hospital wasn’t easy and outside surgical centers were hurting. Sure, things are roaring again and much better, but as we’ve seen before, history eventually repeats itself.

Disability

Many of us perform technical and highly-skilled procedures. That’s what makes us marketable. If you’re a surgeon, your hands are everything. It’s like an athlete who relies on their body for their livelihood.

However, we’re human and we live life. Injuries happen and careers get cut short. Many of us have the impression it’ll never happen to us, but ask any disability insurance provider how many doctors go on claim and they’ll tell you: Physicians get hurt like everyone else.

Sure, statistics will tell you that the likelihood of such an injury is low, but I think Larry Keller of Physician Financial Services puts it best, “The reality of the situation is that if they [physicians] are disabled, the statistic is 100% and nothing else matters. One’s ability to earn an income is their most valuable asset and what allows them to build a lifestyle for themselves and their family, pay down debt and create wealth. It is the foundation of a financial plan and without it, the plan will likely fail on all levels.”

Where would that leave you? What would you do next? Personally, I tell everyone it’s vitally important to be well insured against this happening. Well, that is, until you have enough passive income that you’re self-insured some day.

Is Being a Physician Bad for Your Financial Health?

Now, I don’t want to create the misconception that being a physician is completely bad for your financial future. Yes, student loans are rising and physician reimbursements are falling, however, I still believe there’s a definite potential for a great financial life–in spite of what you hear.

According to Ryan Inman, a financial advisor that works exclusively with physicians and the founder of FinancialResidency.com, “Armed with the proper financial knowledge, physicians can take hold of their financial futures and really help shape their personal lives to how they want to live it.”

In my opinion, it all means that you can’t just be a doctor anymore. You can’t expect to just go to work, clock in, and clock out. You can’t put all your eggs in one basket and expect that a certain lifestyle is guaranteed.

Is There a Solution?

So what can we do? Well, we can complain and mourn the loss of the “golden age of medicine” (which are normal reactions). However, we need to quickly transition and take the situation into our own hands. We can and should hedge our bets, and not rely on one single source of income by creating additional streams instead.

But will that compromise your ability to be the best physician you can be? Some might have you believe that, but try to recognize what their incentives are to say so.

Let’s be honest, no one will be as good an advocate for yourself and your family as you. Spend more time on creating multiple streams of income (particularly passive ones like real estate crowdfunding for example). Figure out why you might not be creating passive income and fix it. Take advantage of all of the resources out there to help guide your financial journey, like blogs, podcastsonline courses, and our Facebook Group.

I believe that will lead to a life in which you can practice medicine on your own terms–on your own time, how much you want, and where you want. In essence, the key to surviving the unknown future is to adapt to the changes, invest well, be proactive, be humble, and simply… create your own job security.

Agree or disagree? Think your job as a physician is stable? Think you can’t be replaced? What measures have you taken to make sure you’re financially stable?

39 COMMENTS

  1. Job security for physicians certainly isn’t what it once was, however, to some extent this is dependent on your specialty. Specialties which are hospital based, anesthesia, radiology, ER, path, etc are always at the mercy of administration. But many primary care docs are in a better position.

    Nevertheless, you make an excellent point, the best way to protect yourself long term is to have multiple streams of income. Not only will those additional sources of revenue accelerate your journey to financial independence, but they can keep you afloat if something unexpected happens to your day job.
    -Ray

    • You’re absolutely right, my field of anesthesia is at the front of line in terms of replaceability. Thought surgeons were immune to it only to hear a few recent stories where they were given a very similar ultimatum – accept less or move on. Tough world out there.

  2. PIMD, everything you have described, I have seen happen. The “we aren’t renewing your contract, another group has it, you can keep your job if you take a paycut” speech has been made to my face. You didn’t touch on one of the other big problems….if you don’t accept substandard care from other people, and you complain about it…suddenly you’re a “disruptive physician”.

    I believe the best response is to not only develop other income streams, but to keep your lifestyle such that you can be mobile, and flexible.

      • Is there another field which has disruptive employee, eg cop, policeman, judge, nurse? Why is there only disruptive physician? If we are the only field with this brand, should we not get together and have a class action lawsuit to expunge this term ?

  3. In a few years, we’ll say how prescient this post was. Highly motivating to proactively take control of our futures.

    Put this immediately in the “PIMD classics” section.

  4. I’ve begun to wonder if other professions have the same fears that we do as doctors. Our income is mostly tied to health insurance, whereas income for lawyers or most business folks come from services and sales. Perhaps that’s the difference why we’re more susceptible to the environmental changes.

    • I think every field is susceptible to disruption which equals lack of job security. I think doctors unfortunately have the biggest false sense of security.

      That is a good point though that a huge factor is that we’re not actually in control of our reimbursements whereas other fields set theirs and typically the normal rules of demand/supply are in effect.

  5. This is a perfect example of why physicians should hustle while the sun is shining. If you have multiple sources of active income and funnel the profits into multiple passive income streams you end up weaving your own safety net.

    We can’t control how long the good times will last but we can control how we make the most of it.

    • You’re right. The last thing you want is to have the rug pulled out under you and you have no other options.

      The one thing I will add is that I know of some physicians who are working extra hard while the sun is shining but are ultimately digging a bigger hole for themselves through significant lifestyle inflation. That can end up in a double whammy situation – sudden decreased pay with increased expenses.

      • I took the WCI “live on half” challenge to the next level with my side hustle income. It’s the “live on none” challenge. I max out my solo 401(k), take advantage of self employed tax deductions and whatever is left gets funneled into passive income streams. Nothing would be more depressing than hustling that hard just to buy a bigger shovel to dig a bigger hole.

  6. Definitely a hard hitting piece to say the least PIMD and one that is definitely playing all across America. Mid level providers are definitely making the higher ups contemplate whether it is better to spend resources on them rather than a more expensive physician.
    I have heard rumblings about automation as well replacing some specialties, especially mine (Radiology). I honestly don’t see it happening in my lifetime (the computer assisted devices currently in place for reading mammograms for example are not reliable at all). But eventually the technology will get to the point where they will be on par with a radiologist. It’s not if, it’s when. I jokingly say that this will create a rare alliance between lawyers and physicians b/c if doctors are replaced by machines, who are the lawyers going to sue?

  7. I’m one of those physicians who became disabled very early in my career. Luckily, I had not one but TWO job-specific disability policies. One that I got while in residency (privately) and one that I received through my full time job later on. And I found I actually NEEDED both! Not but TWO years after residency I had to utilize it. It was not my original plan – for sure! – but things could have been SO much worse. And while I’m protected “financially”, I think it’s also important for all of us to have a contingency plan “professionally” if things do not work out as expected. I’m probably one of those rarities in that I actually really enjoy teaching the next generation of physicians. So now I volunteer as an instructor at my local medical school 3 or 4 days a week while in session (which also happens to be at my alma mater) AND I volunteer at the local Hospice weekly. These two modalities give me both the intellectual/education-sided as well as the patient-sided interactions that I personally needed in my life. I hope no one else has to go through what I went through – but as I always say “it could have been so much worse” had I not prepared for and protected myself.

    • Wow thanks for sharing your story and great to hear it all worked out well.

      If physicians were freed up a bit from financial pressures, I think you’d see more interest in doing what you do – volunteering and teaching our future generations. Different when you practice out of choice vs obligation. Thanks for all you do, it’s awesome.

  8. I saw this coming years ago as you did. This was my prompt to become a landlord. I also became a concierge physician and leveraged a few great income years to create a solid investment portfolio. By front-loading I escaped the crunch I saw in medicine and now trying to let my money do the work for me.

  9. My shifts were forcibly reduced to “make sure we have enough hours for the new guys,” despite working there for 10 years and being the single doc in the group who actually lives in town…. and the one that everyone depended on to ‘just cover for an hour or two’ or ‘can you come in for a couple hours – we’re getting killed here.’

    I went out an found another part time job and a side hustle. If they offered me more shifts (which seems likely, since they’re having hiring issues), I will probably turn them down because I won’t have all my eggs in that one basket.

    • Sorry, that doesn’t like a fun situation but is actually more common than people think. Glad to hear you’re taking matters into your own hands. Does the side hustle have anything to do with wine by any chance?

  10. I witnessed a doctor, who had worked for a hospital for many years, get called into the admin office and fired. No warning, no option to look into the matter, just fired.

    We used to live in a society that fixed things that were broken. If you did something wrong, the company had a lot invested in you so they called you in to repair the problem. Now we live in a throw away society. If something doesn’t work right, we don’t fix it, we throw it away and get another one. Fire this guy and bring in a new one. If you find a doctor who will work for less, switch to the new doctor.

    I had a bad battery in my cell phone and went in for a new one. The kid behind the counter looked at the phone and said I shouldn’t get a new battery, I should get a new phone. There was nothing wrong with my phone, but it wasn’t the latest model. He started explaining to me all the features the new model had that mine didn’t. I went somewhere else and got a new battery.

    The throw away mentality makes jobs very insecure now a days. We all should feel a little bit like a fish in a blender. You never know when someone might turn on the blender and end it all. All the more reason to become financially independent as soon as possible. Then if you are dropped from the medical staff suddenly, it won’t matter.

    Dr. Cory S. Fawcett
    Prescription for Financial Success

  11. Sadly we are replaceable but just like you are addressing here we should acknowledge it head on. By getting our financial house in order, we can make the hospital or employer replaceable.

    Too many times I hear about physicians defending their job, salary or position in the hospital by talking about the past but we should always be looking to and showing the future. Just like it’s a mistake to predict future results of a stock based on historical returns, it’s foolish to do it with our careers.

    By setting up side hustles, passive income streams and taking care of basics (retirement, life and disability etc), we end up giving administrators the fear that “oh man he might leave us before we have a replacement”.

  12. Even in Canada, I have witnessed physicians being fired. Hospitals closing and the senior staff begging their previous trainee who now heads the bigger hospital for a job. (And unfortunately some docs hold grudges).

    I have seen entire specialist units demand terms from hospital admin or else they would quit en masse. Admin simply told them to go ahead since many others want their jobs.

    Of all the laundry list of benefits of FI. The most significant one is having options. Get your financial house in order and they simply can’t touch you….

  13. So true. I’ve lost my job as a hospital went down the tubes and into bankruptcy and closure. I’ve been personally sued not for medical malpractice but for being a part of the Board for a brief period at that hospital.

    I’ve seen physicians lose their jobs and their lives to depression, addiction, and the abuse of prescription drugs that we have easy access to. Nothing is certain in life. Enjoy the career and life you have while you still can!

    Best,
    -PoF

  14. To answer your question… Yes, I do think that my job as a physician is stable. I’m pretty sure I work in the prominent healthcare system that you described with pension, benefits, and all. Some of our new hires were victims of their previous group practice being bought out by a corporation. Exactly like how you described.

    While I do think my job is stable, you’re absolutely right. The stability can be an illusion. And unless I continuously demonstrate added value, I can absolutely be replaced.

    It behooves us physicians to create our own job stability and ultimately the future that we envision for ourselves. Thanks for sharing all your ideas in helping physicians create a better, more stable future through passive income.

    • That healthcare system for sure has now become one of the more coveted jobs on this side of the country due to this perceived stability. Sure, you can stay, but you better play by the rules from what I hear.

  15. I think a career as a physician is pretty stable, one of the more stable jobs out there. However, individual jobs are not, as you have laid out. Certainly being an employee can exacerbate this problem further. As long as you’re willing to be flexible, move around, adjust your practice/skills, I think most physicians will be ok in the foreseeable future.

    • Sure, it can be, but I’ve seen things change without notice, and it seems to be happening on a more frequent basis around me. Yes, we could probably find a job if we’re willing to go whenever and wherever the recruiters need us but I don’t think that’s the kind of life most of us hoped for when we started down this journey.

  16. Great post PIMD. I’ve given several lectures on the changing face of healthcare economics, and sometimes it is met with gratitude and other times with indifference or even passive hostility on the part of doctors. I assume in the latter case it’s because I’m giving a message (with hard data) that they don’t want to hear. Napoleon Bonaparte famously said, “In this life, we are either kings or pawns.” Or as Covey would say, there are those who act and those who are acted upon. Practical intelligence seems to be a rare commodity, but it’s good to see individuals such as yourself working to elevate the general social consciousness.

    • I think you’re doing a great service by spreading your message, and so please keep doing it. I also realize not everyone will care or even like what I have to say but I feel it’s all worth it for those that will listen.

  17. A friend of mine who is board certified and fellowship trained in interventional pain was just informed his clinic will be closing and his staff will all be unemployed. The national company, CPS, is apparently closing clinics in 13 states due to financial hardship.
    Work on achieving your own FI!

  18. I love this post. Multiple streams of income with a big chunk of it being passive is the way to go. 3 years ago I was feeling burnt out due to 80-100HR work weeks, and I had 2 little children. I discovered Dave Ramsey, James Altucher, Locums, Joshua Sheets, and life coaching not necessarily in that order. I left my nephrology partnership job best decision of my life. Did locums as hospitalist worked like crazy for a year to pay off my 260K student loan. I maxed out my 401K, researched and got very interested in real estate. I think hands down that is the best path to financial freedom. Even if you do wnd up in early retirement you can access your money without penalties unlike traditional 401ks. After paying off my debt, and getting a 6 month emergency fund I cut back on locum hours, I reverse engineer the number of shifts needed based on what income I want to make annually. I ‘m still credentialed at multiple hospitals so I consistently get shifts even if it’s 2 per facility because I have 5 of them I’m able to meet my goal of 7shifts a month. The best paRt is I don’t have to travel for locums anymore. Working less shifts has given me a chance to build my side biz as a transformational life coach who works with physicians who struggle with work life balance like I did. I get to live my life through a cooperation which is one of the best ways to save on taxes. Also thanks to Joshua Sheet from radical personal finance podcast I finally moved to the income tax free state of Tx yay! I love this blog, WCI out there who have done a great job educating physicians on personal finance. Generating awareness for physicians on personal finance is the best way to take our back, and not rely on the status quo. Happy July 4th. Claim your freedom by getting your finances in order. Our field is going through an unpleasant transition, but like Dave Ramsey says we still have big shovels which can be leveraged to live life, and practice medicine on our own terms.

  19. I like posts like this because it ensures fewer people will go into anesthesia and will thus improve my own job security. I come from a family of anesthesiologists and people have been saying things like this since the 80’s. Keep it up! 🙂

  20. I think the key is leadership and unite. If you get all the physicians from a local area to form a physician group (including all specialties) and negotiate with the hospital as a whole, they cannot hire brand new physicians for the entire hospital. HR is expensive too. How much money would the hospital lose in a day if there is no elective surgery and empty ORs? I think we have more bargaining powers than we think. Don’t give up fighting for yourself and our patients. Don’t lose to the cooperation who couldn’t care less about actual lives. We have to fix it ourselves. Teachers go on strike, so can we (sort of). We needn’t leadership from our physicians more than ever. But I don’t see any of us speaking up and doing something about it.

  21. I’m family/integrative medicine and I’ve never once worried about job security because:
    A) I own my own business
    B) I’m the Medical Director of an ACO
    C) I’m the Medical Director of a Home Health
    D) I do occasional home visits and I’m in the process of hiring a PA and an NP to do these for me
    E) I have purchased machines to make cash money without me doing a thing
    F) I have multiple insurance based ancillaries to make money without me doing a thing
    G) I get to say thanks but no thanks to every hospital, conglomeration, and physician group who has asked buy me out because they “can give me more money”
    H) I can work in urgent care, locum tenens, government/VA, hospitals, SNFs, large clinics, academics, etc, any time I want. Or I could just switch to Direct Primary Care.

    I’m not saying I have all of the answers, but family medicine ALWAYS has job security. I suppose anesthesiolgists can always jump into the pain management realm or cosmetics … both of which I’m already doing with less drugs and more rejuvenation.

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